UnitedHealth to acquire LHC Group for $5.4bn

June 2022 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

June 2022 Issue

UnitedHealth Group has agreed to acquire LHC Group in a $5.4bn all-cash deal. UnitedHealth will pay around $170 per share in cash for each LHC share held. The deal is expected to close in the second half of 2022, subject to LHC Group shareholder approvals, regulatory approvals and other customary closing conditions.

UnitedHealth expects the LHC deal to be neutral to its outlook for adjusted profit per share in 2022 and modestly add to it in 2023. The company’s co-founders, Keith and Ginger Myers, will invest $10m in UnitedHealth stock, following close of the deal.

UnitedHealth, which runs the US’s largest health insurer, and was the most profitable player in 2021, bringing in more than double the profit of its closest competitor with $17.3bn in earnings, will add LHC Group to its Optum Health business, which operates primary care clinics and surgery centres. LHC has 964 locations in 37 states and says it reaches 60 percent of the US population 65 and older with home health, hospice and home- and community-based services.

LHC Group’s 30,000 employees, including frontline care providers and administrative and support personnel, provide more than 12 million annual in-home patient-focused interventions. The company is widely recognised as one of the highest-quality providers of in-home care in the US, with quality scores consistently running more than one-third higher than industry norms. The LHC Group leadership team will continue forward as part of Optum Health. LHC generated around $2.22bn in revenue in 2021, an increase of more than 7 percent on its $2.06bn in 2020.

“LHC Group’s sophisticated care coordination capabilities and its warm, human touch is so important for home care, and will greatly enhance the reach of Optum’s value-based capabilities along the full continuum of care, including primary care, home and community care, virtual care, behavioral health and ambulatory surgery,” said Wyatt Decker, chief executive of Optum Health. “We greatly admire how the people of LHC Group have created a culture that enables them to be a trusted health care partner to patients and their families when they need it the most, and we look forward to working with and learning from them.”

“Since our founding in 1994, ‘it’s all about helping people’ has been the core of our mission, and as part of the Optum team and its value-based capabilities, we will be able to expand our patient-centered mission and help drive best care practices across the country,” said Keith G. Myers, chairman and chief executive of LHC Group. “Working together as organizations committed to caring for the most vulnerable in society will help us more effectively and efficiently deliver high quality and increasingly value-based care in the home.”

The deal is the latest in a series of investments UnitedHealth and Optum have made to continue their expansion into care delivery. In March, Optum acquired Refresh Mental Health from private equity firm Kelso & Company, roughly 15 months after the private equity firm bought the behavioural health network for more than $700m. Refresh has since been valued at $1.2bn, according to an Axios report.

The health insurance market has boomed since the onset of the coronavirus (COVID-19) pandemic. Last year, health insurer Humana acquired the remaining 60 percent stake it did not own in home health provider Kindred at Home for $5.7bn to expand its patient care business.

The deal also means that UnitedHealth will gain increased access to senior living communities across the country, including Brookdale Senior Living which began working with LHC Group last year, after the home health company acquired 47 Brookdale Health Services assets from the operator’s joint venture with HCA Healthcare.

Richard Summerfield